smallcase Transactions

What are smallcases

smallcases are portfolios of stocks/ETFs, weighted intelligently to track a theme, strategy, or objective

For example, All Weather Investing smallcase is a popular strategy that diversifies your investment into equity, gold & fixed income ETFs for recession-proof investing

Characteristics of a smallcase:

• A basket of stocks/ETFs
• Weights assigned to each constituent
• Maximum no. of constituents - 50
• Centred around a market theme/idea/strategy

Terminologies

Index Value

Every smallcase index value starts from 100 and represents the returns generated by the smallcase since its inception. For example, an index value of 270.27 tells that it has generated a return of 170.27% since inception.

CAGR

CAGR (Compounded Annual Growth Rate) indicates the average yearly return generated by a smallcase from the date of inception.

Inception date

The date since when the historical performance of the smallcase is available.

Minimum Investment Amount

Based on the prices of each stock in a smallcase, and their prescribed weights, a minimum investment amount is calculated that ensures that user buys at least one share of every stock while maintaining the prescribed weighting scheme. User can invest any amount greater than the minimum investment amount

Rationale

This section explains the underlying theme/strategy behind the smallcase and why one should invest in the same. This also includes the methodology used to create the particular smallcase

Invested smallcase

Once a user invests in a smallcase, an invested version of the smallcase is created. iscid is the unique identifier of an invested smallcase.

Thus, if two users invest in the same smallcase with the same scid, they will still have two different & unique iscids. An invested smallcase also includes stocks and shares, as suggested by the original smallcase constituents and weights at the time of investing. The stocks and weights of an invested smallcase might be different from the prescribed weights because of many reasons like

Order Types

Below is a list of various orders that a user can place on an invested smallcase

Buy Order

The first permissible action on any smallcase is a BUY order. In this user selects a smallcase to purchase and mentions an amount greater than or equal to the minimum investment amount to invest. Number of shares of each stock gets calculated as per the prescribed weights

Note: User cannot buy more than one copy of a smallcase. If he intends to invest more money into the same smallcase, he can continue to execute Invest More order

Invest More Order

A user can invest more in an already invested smallcase. The current weightage of stocks are
Used to calculate the minimum investment amount. Just like buy, user can invest more an amount which is greater than this minimum investment amount.

Partially filled/unfilled stock orders

Whenever an order is placed on a smallcase, it can result in one of the following states -

• Filled/Completed: The orders for all stocks in the smallcase have been successfully executed and user now holds desired quantity of shares against each stock.
  Status: VALID - users can place fresh orders on an invested smallcase, only if the status is VALID
• Partially Filled: The orders for some stocks in the smallcase might not get executed. This could be because of several reasons, eg:
  Stock Liquidity issues
  Insufficient funds
  * Any technical error
  Status: INVALID - such invested smallcases needs to be repaired or archived before any fresh order can be placed on it. smallcase remains in disabled state(no order button enabled except repair) until it's repaired or archived
• Unfilled: While both partially filled and unfilled are technically same in the sense that both require an repair/archive action, the only difference between the two is that an unfilled invested smallcase will have orders executed for exactly zero stocks, while partially filled smallcase might have orders executed for one or more stocks

A invested smallcase in either Partially Filled or Unfilled state would have a key recommendedAction with value FIX in the invested smallcase data.

Repair Order

In a repair order, all the unfilled stocks of the previous transaction are attempted again as a fresh order on the same invested smallcase. A repair order can also result into one of the three states described above

If the repair order is filled/completed, the invested smallcase status changed to VALID and other order actions like Rebalance and Invest More are enabled on the invested smallcase. However, if the order is in partially filled or unfilled state, user is expected to take another repair/archive action on the smallcase before he can proceed with any other order.

Archive order

An archiving order on an invested smallcase means that the user doesn’t want to attempt any new orders against the unfilled stocks of the previous transaction. Instead this would mark the invested smallcase status as VALID and the constituents of the order which was marked as archived will not be included in the invested smallcase. But the user will continue to hold the stock/constituents which were already present in the invested smallcase or were filled in the last transaction batch

A repair action is preferred over archive because the archived invested smallcase will not be the same as the original version of the smallcase that user meant to buy/invest more/rebalance/exit & will differ in composition & returns. Since archive action cannot be undone, it's prescribed to take a user confirmation before executing this

Note: Archiving an unfilled smallcase(where previous action was buy and orders didn’t go for any of the stocks in the smallcase) would result in removing that smallcase from the user's investments. User can then continue to place a fresh BUY order on that smallcase

Rebalance Order

smallcases are reviewed & updated on a regular basis. This is done to ensure the stocks & weights in the smallcase continue to reflect the underlying theme and model
This frequency of update can be daily/monthly/quarterly/half-yearly/yearly depending on the type of the smallcase. Once a rebalance update is pushed, a key recommendedAction with value REBALANCE is added to the invested smallcase data.

Exit/Partial Exit

A user can exit an invested smallcase anytime. Exiting an invested smallcase would remove this smallcase from his list of invested smallcases and adds it to his list of exited smallcases. Once exited, user can place a fresh BUY order against the same smallcase anytime in the future.
User can also partially exit an invested smallcase by withdrawing some amount from the smallcase. User can only withdraw amount upto the extent that the remaining amount in the smallcase is greater than the minimum investment amount of the smallcase, as per the current weighting scheme of the user’s smallcase.